M/S. SUNEEL GALGOTIA,NEW DELHI vs. ACIT, NOIDA

The grounds of appeal are as under:-

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The Ld. DR relied upon the assessment order and the order of the CIT(A).

We have heard Ld. DR and perused all the relevant material available on record. From the perusal of the CIT(A)’s order it can be seen that the challenge which was mentioned in the balance-sheet of Galgotia Publications Pvt. Ltd. against which loan of Rs. 82.50 lakhs was raised from City Financial Consumer Finance India Ltd. and the said loan was not raised as contemplated u/s 2(22)(e) which should be treated as deemed dividend. In Assessment Year 2008-09 as well the same premises was given on rent to Metaflex Doors Pvt. Ltd. for 5 months for which rent was accounted for by the company only. Thus, it is not a case of deemed dividend income. Further, from the perusal of the assessment order, it can be seen that no incriminating material has been found during the search and seizure operation and the Assessing Officer has not made any additions in respect of search and seizure operation. This assessment is non-abated assessment. There is no loan or advance as envisaged u/s 2(22)(e) which should be treated as deemed dividend in present assessee’s case. The issue is, therefore, squarely covered by the decision of the Hon’ble Delhi High Court in case of CIT(A) vs. Kabul Chawla (2016) 380 ITR 573 (Delhi) particularly when original assessment had been framed u/s 143(3) prior to the search in the case of the assessee. Hence, appeal of the assessee for Assessment Year 2007-08 is allowed.

As relates to Assessment Year 2012-13, the return of income was filed on 5/1/2013 at total income of Rs.7,39,923/-. The case was selected for scrutiny and notice u/s 143(2) was issued. The assessment was completed at total income of Rs. 27,07,120/- after making disallowance of interest of Rs.19,67,201/-.

As the assessee or the representative for the assessee has not appeared before us, it will be appropriate to take the submissions before the CIT(A) on behalf of the assessee as submissions before us.

The Ld. DR relied upon the assessment order and the order of the CIT(A).

We have heard Ld. DR and perused all the relevant material available on record. In the present Assessment Year, the assessee had outstanding advance from Galgotia Publications Pvt. Ltd. amounting Pvt. Ltd. amounting to Rs. 9,21,582/- which is running current account with the company in which salary and rent were shown and the details were filed before the Assessing Officer as well as before the CIT(A). The closing balance as on 31/3/2012 was Rs. 9,21,582/- as against opening balance of Rs. 32,70,774/- which categorically states that during the year, the assessee has repaid the advance taken in earlier years. From perusal of the assessment order, he Assessing Officer has over looked these aspects and also taken into account the earlier Assessment Year amounting without giving any detailed reasoning while the same is added to the income of the assessee. From the perusal of the submissions before the CIT(A) we can see that the amount raised by the assessee is credited to the account with the company and its repayment is regularly debited to the said account. Thus, provisions of Section 2(22)(e) relating to loan or advance can be deemed as dividend only to the extent of accumulated profit or so far as the loan is not reflected in the accounts, but in instance case the addition was made on the basis of the prior year amounts which was not at all discussed by the Assessing Officer as well as CIT(A) as to how the said amount was taken in respect of the current year account for making addition. Hence, the appeal of the assessee for Assessment Year 2012-13 is allowed.